DA ITAD BIR Ruling No. 168-06

December 21, 2006 DA ITAD BIR RULING NO. 168-06 Sec 106 & 108, Sec 149 of the Tax Code 1997; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-58-01 Embassy of Australia 23rd Floor, Yuchengco Tower RCBC Plaza Ayala Avenue, Makati City Gentlemen : This has reference to your Note No. 459/06 and File No. MN94/00110 dated November 6, 2006 referred to this Office by the Department of Finance and the Department of Foreign Affairs, requesting for the exemption from payment of value-added tax (VAT) on the local purchase of one (1) motor vehicle, for the official use of the Embassy of Australia, specifically described as follows: Make: Toyota Camry 2.4V A/T Model Year: 2006 Color: Thermalyte Engine Number: 2AZ-E013987 Chassis Number: MR053BK40-07003804 In reply, please be informed that Article 34 of the Vienna Convention on Diplomatic Relations reads: "ARTICLE 34 A diplomatic agent shall be exempt from all dues and taxes, personal or real, national, regional or municipal, except: (a) indirect taxes of a kind which are normally incorporated in the price of goods or services; ITCcAD xxx xxx xxx" Thus, the tax exemption privilege of an Embassy and/or its diplomatic agents does not include exemption from the value-added tax (VAT) on its local purchases of goods and services. In other words, purchases by that Embassy of goods and/or services shall in general, be subject to the value-added tax prescribed under Sections 106 and 108, and ad valorem taxes under Section 149, all of the National Internal Revenue Code of 1997. However, applying the principle of reciprocity, this Office may confirm exemption of the Embassy of Australia and/or its personnel on their purchases of locally-assembled motor vehicles it appearing from the list submitted by the Department of Foreign Affairs as of October 18, 2005 that your Government allows similar exemption to the Philippine Embassy and its personnel on their purchase of locally-assembled motor vehicles in your country. Hence, the local purchase of one (1) unit of 2006 Toyota Camry 2.4V A/T for the official use of the Embassy of Australia is exempt from value-added tax. (BIR Ruling No. DA-ITAD-58-01 dated July 12, 2001) This ruling is issued on the basis of the facts as represented. However, if upon investigation it shall be disclosed that the actual facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service